Headline index Nifty opened on a negative note on expected lines and spent the first half of the session in a sideways trajectory and within a defined range. The afternoon trade saw some incremental weakness creeping in as the index dipped lower. The index slipped below 14,700 as it showed no intention to recover and finally ended the day with a net loss of 154.40 points or 1.04 per cent.
Nifty remained within a defined channel as evident from the charts. Wednesday’s weakness seemed much of a technical nature as the session not only the last trading session of the month, but it was also a last trading session of the quarter and the financial year as well which led to some tactical adjustments. On a monthly note, Nifty has ended gaining 161.55 points or 1.11 per cent.
Going ahead, we enter the weekly options expiry as well as the last trading day of the truncated week with Friday being a trading holiday on account of Good Friday.
While 15,000 continued to see heavy Call writing, the strikes of 14,800 also saw some short Puts being unwound. As of now, while 15,000 holds the maximum Call OI, the highest Put OI stood at 14,500 level.
The market may possibly react to additional US stimulus details that will be out tonight. In any case, the levels of 14,750 and 14,825 will act as resistance points, while support will come in at 14,610 and 14,550 levels.
The Relative Strength Index (RSI) on the daily chart stood neutral at 48.28 and did not show any divergence against price. The daily MACD was bearish and under its Signal Line.
The pattern analysis shows that Nifty is under a corrective retracement and trades in a falling channel as evident on the charts. Apart from a upper trend line that may act as a pattern resistance in the event of any up move, Nifty’s 50-DMA at 14,774 will stay an important resistance point for the index on a closing basis.
Regardless of any other technical setup, the behavior of the index vis-à-vis the level of 50-DMA will be crucial on a closing basis. The market stayed highly stock-specific, and some stock-specific outperformances were seen from IT, pharma and select FMCG stocks. This texture of the market is likely to persist for some more days to come. We recommend continuing to stay stock-specific and approaching the market on a highly selective note.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at firstname.lastname@example.org)